How to Obtain an SBA Loan and Have it Forgiven

This post was updated on April 3.

In recent weeks, Congress has adopted three bills aimed at stabilizing the economy, with more to come. The most notable of these was the $2.2 stimulus package (the CARES Act) that President Trump signed into law on March 27. This law contains a nearly $350 billion federal small business loan protection program called the Paycheck Protection Program (PPP) that will provide significant loan forgiveness for small businesses with fewer than 500 employees if employers meet certain criteria.

 Loan Forgiveness

  • Under the new PPP loan program in the CARES Act, small businesses with fewer than 500 employees can take out loans equal to 2.5 times their average monthly payroll from 2019 with the total capped at $10 million. For many businesses that meet key conditions on the use of these funds, the loans may be forgiven.
  • Businesses applying for an Economic Injury Disaster Loan (EIDL) may request an advance of up to $10,000 to be delivered within three days of the request. An applicant will not be required to repay this advance if the funds are used to cover payroll, provide sick leave or cover other business costs, even if the applicant is subsequently denied a loan under the EIDL program.

NAHB has created an online document, CARES Act and Small Business Lending Programs, that offers more details about these small business lending programs, including the conditions required for loan forgiveness.

Resources for HBAs

  • 501(c) nonprofits, including many of NAHB’s state and local federation associations, may be eligible for an EIDL loan, including a forgivable emergency grant up to $10,000, if less than 50% of the annual expenses go to lobbying efforts.
  • The online document, Stimulus Resources for State and Local Associations, gives NAHB’s HBA partners a sense of whether they may be eligible.

A Broad Overview of the 3 Bills: How They May Apply to Your Business

  • Stimulus Resources for NAHB Members is a seven-page online document that explains two Small Business Administration lending programs – SBA’s Paycheck Protection Program (PPP) 7(a) loans and its Economic Injury Disaster Loans (EIDL).
  • The summary also looks at employee retention credits, delay of employer-paid payroll tax payments, net operating loss (NOL) modifications, and other important measures that may apply to your business.
  • As noted above, the two SBA lending programs are critically important because for many businesses that meet key conditions on the use of these funds, the loans may be forgiven.
  • The Treasury Department on April 2 released regulations and guidelines on PPP and referenced existing SBA guidelines and language. The Treasury language stipulates that recipients of PPP loans cannot use the funds “for building homes for future sale.” Additional language says “apartment buildings and mobile home parks are not eligible” under the PPP (7a) loan program. Moreover, passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except as Eligible Passive Companies under 13 CFR § 120.111) are not eligible. This broad building language is unclear and raises many questions. NAHB is seeking clarity and guidance on what this may mean for our members. We are also reaching out to Treasury to modify the language so that it meets the needs of our members.

Other Key Resources and Tools

  • NAHB has also prepared an online FAQ for businesses considering applying for a PPP 7(a) loan. The FAQs cover eligibility, purposes for which funds can be used, loan forgiveness conditions, and documents needed for an application.
  • NAHB has been conducting a series of webinars on the small business loan programs and tax relief measures under the stimulus bill. Recordings of the webinars will be available soon. The final Small Business Loans webinar will be held today at 1 p.m. ET. Register now.
  • NAHB has prepared a wide range of information to help members navigate the crisis. These resources are available at org/coronavirus.

Note: NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such.

For more information, contact Alex Strong, at 800-368-5242 x8279 or Heather Voorman at x8425.


Comments (29)

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  1. Bob says:

    I would like information on the SBA loans. We are members of BIA Southern California and San Diego.
    We are a small Landscape Architecture firm with 9 permanent emplyees and our work has declined in the past 2 months and we would like to keep paying our employees.

  2. Alan Colby says:

    There is still ambiguity regarding 1099 “employees”. In other words, if an individual is paid as 1099 and:

    1. They do not 1099 for others;
    2. You could otherwise hire a W-2 individual for the same work;

    …then can their 1099 MISC filings be utilized under PPP and be eligible for forgiveness?

    I am still getting conflicting answers on this from both CPA’s and tax attorneys.

  3. robert clark says:

    Is this loan required to be paid back. If so when
    What if any is the interest rate on this loan

  4. Melissa says:

    Very helpful information ! ! !

  5. I have a small business that has been affected by this pandemic.
    We need are in need of this loan to continue our business that has been affected.


    Clay Williams
    Clay’s Lawn & Fence.
    Tyler, TX.

  6. Raymond Pruban says:

    I tried to attend the first webinar and could not get audio. Is there a link to watch them now?

  7. Jeff Doxsee says:

    I am a sole Proprietor/ independent contractor/Realtor exclusively representing a Builder in Tallahassee. I tried to fill out the application twice & it never advanced to the 3rd page. Any suggestions?

    • NAHB Now says:

      Jeff, if you are applying for the EIDL, the SBA’s system has been overloaded with the number of applications it has received it recent days. Please continue to try. If you are applying for a PPP loan, you will apply directly through an SBA-approved lender. You can find a lender here:

  8. Thad Theall says:

    I applied for the EIDL and the 10k advance over a week ago and have seen or heard anything despite having a Application number assigned to me and my business and. Has the 10k been doled out yet?

    Thad Theall
    Maurice LA

    • NAHB Now says:

      Thad, we are hearing that the applications are taking a few weeks to process due to the overwhelming number of applications that the SBA has received. We will let you know any updates as they arise.

  9. Betty Martin says:

    I am a Home Builder with 4 employees. I have six homes under construction with interest payments of over $20,000 per month and employee payroll of approximately $22,000 per month. I am a LLC. The question of Number of Jobs:, how do I answer that? Does Number of Jobs mean, houses under construction or employees?

  10. Stan Luhr says:

    AxisPointe has donated free use of its InSite Mobile software for builders who must idle their active projects. The field app helps builders capture important data to protect the site and validate construction progress in the event of a claim.”

  11. Michael Smith says:

    Interested in future posts

  12. Pam says:

    We are a small construction business with one employee who is also the owner. I am getting very confused by all of this and am wondering if he can file for unemployment and also the business file for the PPP loan? Any help would be greatly appreciated. Thank you.

    • NAHB Now says:

      No. A small business run by a single employee would not qualify for both unemployment and the Paycheck Protection Program (PPP) simultaneously as the PPP is meant to keep you employed and paid for an eight week period. The individual may qualify for unemployment after the funds for the PPP are expended.

      • Chad says:

        Hi. I am in the same boat here as this “Pam question” I own & operate a small business installing floor coatings. I pay my son for his help. It’s just us. I was told by the bank and CPA that the PPP loan wouldn’t be for a small business like us. We were told to apply for the EIDL loan instead. So I did. Was I wrong to do so? Can I also apply for the PPP? Which would be more beneficial to us-seeing is we’ve lost months of income due to this COVID19 issue? If I should have applied for the PPP, is there a way to retract EIDL application? Oh, and if one would receive up to $10,000-what if they don’t need to use it all-can funds be returned so there isn’t an issue with loan or the forgiveness of loan? Thank you! **Seems no one really knows how to proceed, so we appreciate you answering questions.

        • NAHB Now says:

          Chad, these questions would best be answered by your SBA-approved lender. Yes, it is possible to apply for and receive both loans, but there are stipulations to consider. Your SBA lender is in best position to offer more specific advice.

  13. Larry says:

    I am a sole member and only employee of a very small L.L.C. cleaning company.I am listed as an essential business and am able to work.What I am finding is that residential and commercial accounts are understandably cutting back on services.What are my options?

  14. Paul says:

    I have 3 employee’s on a shared work program with them getting 20 hrs of unemployment & then trying to get 20 hrs of work done.
    So if I read it right as long as back to normal by June 30th I can get amount used forgiven?
    Or do we need to get them back at full time by time loan is issued?

  15. I have been planning to apply for an SBA loan for my start-up business. I’m glad you shared this by the way; at least now I am aware that a company that has fewer than 500 employees could be granted a loan that is twice its average payrolls. It’s also interesting to learn that if a company decided to apply for an economic disaster loan, it’ll be allowed to advance $10,000.

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